If you’re serious about a career in Wall Street, there are a few paths you could follow. You could go to a target school and be recruited by a storied and prestigious investment bank like Goldman Sachs or JP Morgan to join their Analyst program, where you’ll put in punishing 100+ hour work weeks learning the ropes by building financial models and rearranging corporate logos in PowerPoint pitch decks. You’ll eat dinner in the office most nights and when you think you’re ready to head home, your VP will come back with 25 comments to the deck and the model with the email subject line “Pls fix.”
After a few years in the Analyst program, you’ll be burnt out, and so you’ll be in touch with recruiters from private equity firms. The hours are better, and you’ll have a bit more seniority. You’ll spend your time writing memos to present to your investment committee for why a Midwest-based widget manufacturer makes an attractive target for your buyout fund.
Alternatively, you could study some sort of esoteric advanced math or physics, and because academic jobs don’t pay enough to live on, you instead go work at a hedge fund as a “quant” where you’ll build indecipherable black-box algorithms that seek out miniscule price relationships between various asset types, which your bank or fund will then use to trade.
These are only two of the many career paths you could follow to a lucrative long-term career as a Wall Street professional, but to be honest, they are kind of a drag. Who wants to work 100+ hours a week on fire drill financial models and rearranging logos in a PowerPoint deck? And to be honest, not many people are smart enough to become hedge fund quants.
So, if you’re a person of low-to-middling intelligence, what’s the best way to become a successful investor? That’s easy! Run for Congress! As a US Congressperson, you and your other low-to-middling intelligence colleagues will be able to use your access to sensitive information and your influence as a policy maker to make profitable trades in your own account without any fear that you will be sent to jail for insider trading. You will be subject to less stringent disclosure and personal trading limitations than even the greenest first year Investment Banking Analyst, or anyone else who works at a brokerage or asset manager. Now that’s what I call alpha.
I’ve written about this before. But I bring it up again because earlier this week Nancy Pelosi (D-$$CA$$) was in the news for defending the notion that lawmakers and their spouses should be able to trade individual stocks. Let me state it clearly and unequivocally: Members of Congress and their spouses should be ABSOLUTELY BARRED from trading in individual stocks. Pelosi’s argument was the type of incoherent nonsense that one would only expect from an elected official. She said: “We are a free-market economy. They should be able to participate in that.” Nothing precludes elected officials from participating in a free market economy in the form of diversified index ETFs. It’s a bit harder to say with a straight face that it’s a “free market economy” if you’re selling $20m in stock after receiving a briefing on COVID that wasn’t broadcast on national TV for the benefit of others who might have found the information useful to trade on.
The concept of “public service” seems like it should entail some sort of sacrifice. Being unable to trade in individual stocks or options seems like the most miniscule of sacrifices. Every single employee of any reputable bank or asset manager is subject to more restriction and oversight of personal trades than members of Congress, which is frankly insane.
Further Reading:
https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9
https://www.capitoltrades.com
Bravo Anders! Well said!
I could not agree more! It is gross that these folks hold such a low ethical bar for themselves.